S. Floridians push U.S. catastrophe fund

Reps. Klein, Mahoney to unveil plan

August 3, 2007|By William E. Gibson Washington Bureau Chief

WASHINGTON — Before returning home to face their South Florida constituents, U.S. Reps. Ron Klein and Tim Mahoney plan to unveil legislation today to create a national catastrophe fund to try to curb the costs of homeowner insurance premiums.

Financial Service Chairman Barney Frank, who will join them at a news conference in Washington, requested the bill before the August congressional recess, scheduled to begin next week.

The committee plans a hearing on the bill this fall, and Speaker Nancy Pelosi has urged consideration by the full House by the end of the year.

The bill fulfills a long-standing promise to seek relief for homeowners by proposing a national pool to spread risks and limit liabilities.

Under this proposal, the federal government and states would pool their resources to back up the private insurance market by covering extraordinary costs in the aftermath of a major natural disaster. The federal government would also provide low-interest loans through the states to help meet the cost of claims.

The idea is to limit liability so that private insurers can charge lower premiums.

States could join the national plan or opt out. Premiums would be determined by the level of risk, so Floridians likely would pay more than would homeowners in less storm-prone states, but less than they're paying now.

The Financial Services Committee last week approved a separate bill that would add windstorm coverage to the national flood insurance program. That bill is designed to ensure coverage whether damage comes from wind or water - removing a source of confusion, lawsuits and arbitrary payment of claims that marred recovery from Hurricane Katrina.

The flood insurance bill proposed by Rep. Gene Taylor, D-Miss., would supplement, not replace, the bill to be introduced today by Reps. Klein, D-Boca Raton, and Mahoney, D-Palm Beach Gardens.

``These are not competing ideas," said Brian Martin, legislative aide to Taylor.

``Under our bill, homeowners would know they have coverage, whether its damage from wind or water. But there would still be a lot people in state pools or with private wind insurance who need a federal backup."

William E. Gibson can be reached at 202-824-8256 or at Wgibson@sun-sentinel.com.